Trend in Pharmaceutical Market
Content
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SAMIK GHOSH JSB BATCH (11-13) Sem 6th
Trend In Pharmaceutical Market
Introduction
Technology has prompted drastic changes in the marketing world over the past decade, and pharmaceutical marketing has not been excluded from this evolution. Faced with shifting consumer and physician media preferences and shrinking budgets - what is a smart pharmaceutical marketer to do? The task is best summed up by the words of English naturalist Charles Darwin, “It is not the strongest of the species that survives, nor the most intelligent that survives. It is the one that is the most adaptable to change.” So change you must. The following paper overviews the latest consumer and physician digital health trends, explores digital marketing examples, and shares helpful resources for staying up-to-date on the latest digital pharma news and information.
Digital Health Trends Physician Market Trends
The first and still the most prevalent, pharmaceutical drug promotions were aimed at the gatekeepers of the prescription pad - physicians. Traditionally, pharmaceutical companies have deployed sales reps armed with product information and freebies to promote products to doctors. But technology trends and changing media preferences are forcing pharmaceutical companies to reassess how they reach and build relationships with physicians. Internet-savvy In the past, doctors were limited to offline materials like physicians are no longer journals and references for accessing medical information and an emerging group – news. But those days are long gone, and with just a click of a nearly all physicians are mouse or touch of a screen, physicians have access to all of the resources they need to stay abreast of the latest online for professional knowledge in the field. Internet-savvy physicians are no longer purposes weekly or an emerging group – this market is at a saturation point, as more. nearly all physicians are online for professional purposes weekly or more. In fact, the average physician now spends a full work day (eight hours) per week using the Internet for professional reasons, a substantial jump from only 2.5 hours in 2002. The trend of shifting to digital channels is expected to continue, with physicians reporting that they expect to increase their use of online resources in the near future. Professional content that have been feeling “the shift” the most are clinical textbooks/references, journals, conferences, news, and continuing medical education (CME).
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Mobile technology has played a significant role in increasing physicians’ dependency on online resources – 64% of doctors own smartphones and are using them to supplement their desk or laptop computer usage to be “always on.” Also, mobile devices help physicians to access clinical resources at multiple points throughout their day, even to at the point of care. Currently, physicians prefer to conduct easy tasks such as information-checking on mobile devices, while leaving more complex activities like CME for completion on their PCs. But as mobile browsing capabilities improve, physicians will start to use smartphones for more advanced activities than just reference purposes.
Physician engagement in Web 2.0 has been one of the hottest topics over the past few years. As a group, physicians have acclimated themselves to advanced online activities, such as watching streaming video and listening to podcasts, at a much faster rate than consumers. Doctors are also catching the social media fever. Many are collaborating in online communities designed specifically for healthcare professionals; participation in these networks doubled between 2008 and 2009. Just as the professional channel mix is evolving, so is the traditional physician-sales rep relationship. Physicians are no longer limited to in-person details for information and updates on pharmaceutical products, but can easily seek out this type of information at any time via the Internet. In light of this, pharmaceutical companies are offering physician online customer services such as customer service portals, live video reps, interactive detailing, and e-sampling. Sales reps are also “digitalizing” their in-person visits with tools such as tablet PCs.
Trend In Pharmaceutical Market
Consumer Market Trends
Unlike physician marketing, DTC advertising in the U.S. is a fairly recent development, only just about to reach the quarter-century club. And the DTC advertisements that we know today have only cropped up in just over the past decade, after the FDA amended its legislation on the amount of risk information required for drug companies to append to promotional material. Similar to the physician market, an emerging breed of eHealth consumers – those using digital sources for health – is transforming direct-to-consumer (DTC) marketing. Like in the case of the physician market, the consumer channels mix has been shifting significantly towards digital over the past decade. An ever-increasing plenitude of media sources has ultimately given individuals the upper hand in controlling their information consumption, lessening advertisers’ ability to reach a concentrated consumer mass through an y one channel. Television, magazines, and newspapers no longer dominate the news and entertainment world as they once did. In fact, less than half of U.S. adults report to watch all of their Less than half of U.S. adults television programs lives on their TV set, indicating report to watch all of their the growing popularity of DVR, online video, and television programs lives on other alternative viewing channels. Following suit their TV set. with the overall consumer channel shift, individuals of all ages are turning to the Internet as tool to empower healthcare decisions. This eHealth consumer market is not yet at the point of saturation, but still is a substantial 60% of the U.S. adult population. Health 2.0 is one of the hottest areas of online health. Over 60 million U.S. adults consume or contribute health-related social media content, such as blogs, message boards, chat rooms, online patient support groups and other networks. Patient online rating and reviewing of doctors, health insurance plans, hospitals, and prescription drugs is one of the fasting growing Health 2.0 activities - and is helping consumers to compare experiences and become more empowered in their personal healthcare decisions. Consumers have not reached the same adoption levels as physicians when it comes to smartphones and advanced mobile technologies beyond just the cell phone. But an early adopter group of mHealth (mobile health) consumers is emerging, as already over 10 million consumers use mobile devices for health and medical purposes. The mHealth trend has been largely driven by a plethora of new healthrelated iPhone applications, ranging from weight loss trackers to diabetes management tools to medication dosage references.
Trend In Pharmaceutical Market
Major Industry Trends
Healthcare and pharmaceuticals are two distinct industries, but they are interdependent and are subject to similar trends, which is why they are covered together in this profile. Both are benefiting from ageing populations in many advanced economies, and various developing countries, such as China. In addition, important medical discoveries, including the decoding of the human genome, are fueling scientific advances, and facilitating the release of new drugs and treatments.
The Impact of the 2008 Recession and Growth through 2011
The investment community generally regards healthcare and pharmaceutical companies as “defensive” stocks, because they tend to be relatively immune to the vagaries of the economic cycle. While consumers may cut back on purchases of many discretionary items during a recession, most people regard their health as a priority. In addition, while individuals may cut back on private healthcare in times of economic hardship, this simply increases demand for healthcare services provided by the public sector. Most healthcare spending in the Western world is funded by governments, and such spending is highly sensitive in political terms. Most democratically elected governments prefer to find savings in areas other than healthcare for fear of losing votes. Clearly, however, even healthcare spending comes under pressure during a severe economic recession. In both Europe and the United States, spending on health and government support for healthcare for the vulnerable and the elderly is cited, along with state pension commitments, as one of the more intractable drivers behind growing and unsustainable public sector deficits. Beyond just looking up general health resources, 100 million consumers are online specifically for pharmaceutical or prescription drug information. Individuals obtain this information from a variety of sources, including blogs, insurance sites, general health portals, government sites, Wikipedia, online communities, and of course the corporate and brand sites of the product makers themselves.
Trend In Pharmaceutical Market
Online health and pharma digital trends are leading to better informed, more empowered patients, and are impacting physician-patient interactions. Virtually all U.S. physicians report that at least some of their patients bring health information they found online to an appointment, and more than two-thirds of physicians believe that this trend is a good thing. Additionally, the majority of physicians report they spend more time with a patient as a result of the information they brought in to discuss. Traditional doctor-to-patient lectures are giving way to two-way conversations between physicians and informed eHealth Consumers.
Rx Connect™ delivers comprehensive brand information with digital media---at the pharmacy shelf next to targeted OTC products. Consumers get the information they need about the prescription product as well as the condition it treats---facilitating a more informed patientphysician dialogue.
Trend In Pharmaceutical Market
Market Analysis
Healthcare Spending
The total global expenditure for health is now more than US$4.7 trillion a year, according to the World Health Organization, and health expenditure as a percentage of GDP has been increasing among all major economies. Spending on healthcare varies widely from country to country, as do outcomes. Nor is there necessarily a correlation between the amount of money spent and the effectiveness of the healthcare system. The United States spends more on healthcare than any other country, in both relative and absolute terms, yet its healthcare system scores poorly in terms of its overall performance, according to the Commonwealth Fund Commission, a US private foundation that supports independent research on healthcare issues. The Fund produced a report on the performance of the US health system in 2008 (“National scorecard on US health system performance”). The scorecard aimed to measure and monitor healthcare outcomes, quality, access, efficiency, and equity in the United States. It ranked the United States last out of 19 countries on a measure of mortality amenable to medical care.This poor performance may reflect the nature of healthcare provision in the United States. The country has several types of privately and publicly funded insurance plans that provide healthcare services. However, the private sector dominates healthcare and the United States is the “only wealthy, industrialized nation that does not ensure that all citizens have coverage” (that is, some kind of insurance), according to the Institute of Medicine, a nonprofit organization for science-based advice on matters of biomedical science, medicine, and health. By contrast, a publicly funded healthcare system, the NHS, dominates healthcare in the United Kingdom, accounting for more than 80% of healthcare spending in the country. Founded in 1948, it aims to provide a free, comprehensive healthcare service, with delivery at the point of need, regardless of the ability to pay. It is the world’s largest publicly funded health service, and claims it is also “one of the most efficient, most egalitarian, and most comprehensive.” Yet it has many critics, who argue that it is inefficient and overly bureaucratic. Other countries fund their health services in a variety of ways. According to Key Note Ltd, a UKbased market-research company, the Netherlands operates a national insurance market for its 16 million residents. Plans may operate on a for-profit or nonprofit basis. The insurance market is highly concentrated, with the top five plans accounting for 82% of enrolment. Plans typically offer coverage in all areas of the country and include all providers, although selective contracting is allowed. Children are covered in full through public funds. Premiums charged for adults represent 50% of the expected annual costs. By contrast, according to Key Note, the Swiss insurance system, which covers 7.5 million people, is highly decentralized. Only nonprofit
Trend In Pharmaceutical Market
insurers may participate in the scheme, and Swiss premiums vary widely according to the health risks of insured pools across the country, and within regions.
Country Australia Canada France Germany Italy Ireland Japan Portugal Spain Sweden Switzerland United Kingdom United States
Healthcare spending, % of GDP 8.9 10.1 11.0 10.4 8.7 7.6 8.1* 10.2* 8.5 9.1 10.8 (est.) 8.4 16.0
Table 1. Total healthcare spending as a percentage of GDP, 2012. (Source: OECD,www.irdes.fr/EcoSante/DownLoad/OECDHealthData_FrequentlyRequestedData.xls)
Japan spends around 8.1% of its GDP on healthcare, almost half the amount of the United States. Yet the Japanese have the longest healthy life expectancy on the planet. Diet and lifestyle clearly play a key role, but the country’s universal healthcare system may also be an important factor. Everyone in Japan is required to take out a health-insurance policy, either at work or through a community-based insurer, according to Key Note. The firm adds: “The government pays for those who are too poor. However, 80% of Japan’s hospitals are privately owned—more than in the US—and almost every doctor’s office is a private business. The Japanese Health Ministry tightly controls the price of healthcare, down to the smallest detail. Every two years, the healthcare industry and the health ministry negotiate a fixed price for every procedure and every drug.” The US-based National Bureau of Economic Research conducted a study of ten OECD countries and it points out that healthcare expenditure has been growing at a faster rate, often considerably faster, than per-capita income. In the United States, healthcare expenditure has tripled as a share of GDP since 1950, from 5% to 15% of GDP. The NBER’s study found that the primary cause of the continued ramping up of healthcare costs was the provision of increased healthcare benefits. It points out that pushing up health benefits faster than per capita tax and income growth is clearly unsustainable, but that major economies, the United States in particular, currently show little sign of reining in the upward march of benefits, despite huge cost increases. If this keeps up the United States will see a doubling in healthcare costs as a
Trend In Pharmaceutical Market
percentage of GDP within the next 20 years, and a tripling in the next 40 years. No country could afford that, it points out, so the dilemma of what level of healthcare is appropriate remains to be resolved.
Global R&D Spending ($ Billions) 1996-2009
Top 15 R&D Expenditure ($ Billion) 2011
COMPANY Novartis Pfizer Roche Merck Johnson & Johnson GlaxoSmithKline Sanofi-aventis AstraZeneca Eli Lilly Bristol-Myers Squibb Abbott lab. Takeda pharma Boehringer ingelheim Daiichi sankyo Money(Billion) $9.58 $9.1 $8.8 $8.4 $7.5 $6.29 $6.24 $5.5 $5.00 $3.8 $3.7 $3.48 $3.2 $2.2
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Astellas pharma $2.5
Total: Over $85 Billion
Overview of Pharmaceutical Industry The Indian Pharmaceutical Industry currently tops the chart amongst India’s science -based industries with wide ranging capabilities in the complex field of drug manufacture and technology. The Indian Pharmaceutical Industry ranks very high amongst all third world countries, in terms of technology, quality and the vast range of medicines that are manufactured. The Pharmaceutical industry has grown from mere US$ 0.3 billion turnover in 1980 to about US$ 21.73 billion in 2009-10. The country now ranks 3 rd in terms of volume of production (10 per cent of global share) a 14th largest by value (1.5 per cent of global share). One reason for lower value share is the lowest cost of drugs in India ranging from 5 per cent to 50 per cent less as compared to developed countries. Indian pharmaceutical industry growth has been fuelled by exports and its products are exported to a large number of countries with a sizeable share in the advanced regulated markets of the US and Western Europe. Many Indian companies maintain highest standards in Purity, Stability and International Safety, Health and Environmental (SHE) protection in production and supply of bulk drugs even to some innovator companies. This speaks of the high quality standards maintained by a large number of Indian Pharma companies as these bulk actives are used by the buyer companies in manufacture of dosage forms which are again subjected to stringent assessment by various regulatory authorities in the importing countries. More of Indian companies are now seeking regulatory approvals in USA in specialized segments like Anti-infective, Cardiovascular, CNS group. Along with Brazil & PR China, India has carved a niche for itself by being a top generic Pharma player. Increasing number of Indian pharmaceutical companies have been getting international regulatory approvals for their plants from agencies like USFDA (USA), MHRA (UK), TGA (Australia), MCC (South Africa), Health Canada etc. India has the largest number of USFDAapproved plants for generic manufacture. Considering that the pharmaceutical industry involves sophisticated technology and stringent "Good Manufacturing Practice (GMP) requirements, major share of Indian Pharma exports going to highly developed western countries bears testimony to not only the excellent quality of Indian pharmaceuticals but also its price competitiveness. More than 50 per cent share of exports is by way of dosage forms. Indian companies are now seeking more Abbreviated New Drug Approvals (ANDAs) in USA in specialized segments like anti-infective, cardio vascular and central nervous system groups.
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Exports India currently exports drug intermediates, Active Pharmaceutical Ingredients (APIs), Finished Dosage Formulations (FDFs), Bio-Pharmaceuticals, Clinical Services to various parts of the world. Export of Drugs and pharmaceuticals from 2007-08 to 2009-10 are given below:
Year 2007-08 2008-09 2009-10 Exports (US$ billions) 6.3 8.6 9.1 Growth (in percent) 14.4 35.7 5.9
Source: Directorate General of Commercial Intelligence and Statistics (DGCIS) Kolkata
The domestic Pharma Industry
The domestic Pharma Industry has recently achieved some historic milestones through a leadership position and global presence as a world class cost effective generic drugs' manufacturer of AIDS medicines. Many Indian companies are part of an agreement where major AIDS drugs based on Lamivudine, Stavudine, Zidovudine, Nevirapine will be supplied to Mozambique, Rwanda, South Africa and Tanzania which have about 33 per cent of all people living with AIDS in Africa. Yet another US Scheme envisages sourcing Anti Retrovirals from some Indian companies whose products are already US FDA approved. Many Indian companies maintain highest standards in Purity, Stability and International Safety, Health and Environmental (SHE) protection in production and supply of bulk drugs even to some innovator companies. This speaks of the high quality standards maintained by a large number of Indian Pharma companies as these bulk actives are used by the buyer companies in manufacture of dosage forms which are again subjected to stringent assessment by various regulatory authorities in the importing countries. More of Indian companies are now seeking regulatory approvals in USA in specialized segments like Anti-infectives, Cardiovasculars, and CNS group. Along with Brazil & PR China, India has carved a niche for itself by being a top generic Pharma player. Increasing number of Indian pharmaceutical companies have been getting international regulatory approvals for their plants from agencies like USFDA (USA), MHRA (UK), TGA (Australia), MCC (South Africa), Health Canada etc. India has the largest number of USFDA -
Trend In Pharmaceutical Market
approved plants for generic manufacture. Considering that the pharmaceutical industry involves sophisticated technology and stringent "Good Manufacturing Practice (GMP) requirements, major share of Indian Pharma exports going to highly developed western countries bears testimony to not only the excellent quality of Indian pharmaceuticals but also its price competitiveness. More than 50 per cent share of exports is by way of dosage forms.
Indian companies are now seeking more Abbreviated New Drug Approvals (ANDAs) in USA in specialized segments like anti-infective, cardio vascular and central nervous system groups. Trends Since the mid-90 the industry has been undergoing a consolidation period. Mergers involving many large and medium size companies have been common in this period. The success of the stock market has made large amounts of capital available at reasonable rates for borrowing or for raising equity. The companies involved in the mergers are biotech companies, who develop products based on living cells. Also involved are companies who have developed new technology in unlocking the genetic makeup of human. Many foreign companies have been entering the United States market because of its uncontrolled pricing structure, rapid approval processes, private and public insurance reimbursement policies and government support for basic research. Additionally, the industry enjoys many tax benefits not available in other countries, although the benefits are narrowing. The tax benefits include Research & Experiment Credit for research conducted in the United States, the IRC 936 Puerto Rican Tax Credit for possession companies, and Orphan Drug Credit for illnesses afflicting two hundred thousand or less patients. Benefits of relocation to the United States include the ability to advertise to both the medical community and direct to consumers in an effort to increase awareness and consumption. The restructuring of the United States’ Food and Drug Administration has had a tremendous impact in the ability of companies to bring drugs to market quickly. A tremendous lobbying effort on the part of the drug industry has resulted in the reduction of the average approval time for new drugs from two or three years to one year or less. A prime example of the quick approval process was the 42-day approval of reverse transcription drugs for HIV that stems the progression of the virus. More than half of the new drugs approved in the United States in 1998 were the first approval anywhere. Another segment of the industry that has enjoyed the changes has been the generic pharmaceutical industry. This segment may manufacture drugs based on the original product once the patent on the original chemical entity expires. The generic industry does not have to conduct the expensive clinical trials performed by innovator companies. Clinical trials are performed in order to prove a drug is safe and effective for the illness they wish to treat. Not
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having to conduct clinical trials has substantially reduced the cost of bringing a product to market. The last segment of the pharmaceutical industry, which resulted from the early 90’s downsizing, is the Clinical Research Organization (CRO’s) segment. These companies are primarily involved in the clinical trial, which shows the effectiveness of the drug. Clinical trials are quite large, often involving 3,000 or more patients who volunteer to test the product. These companies are contracted by innovator companies who pay them on a per patient basis to conduct the trials. All the data belongs to the drug company that pays for the trial. The trial results must be statistically valid.
Consumer eMarketing Life Cycle
Reach DTC advertising was still in its adolescence when the usual way of doing things began to change due to emerging technologies and new media. Television, print and radio ads become less effective as the consumer media mix continues to fragment. Additionally, the mass media tactics that were once successful in raising awareness of blockbuster drugs aren’t as efficient as the industry shifts focus to niche therapies. So while offline DTC advertising still dominates, it’s important for pharmaceutical marketers to keep up with consumers’ evolving media preferences. Action Items o Search is still a major consumer driver to online health and pharmaceutical content – consumers start with search engines two-thirds of the time when looking for health information online. Look into expanding brand sites with keyword-rich content on topics relevant to target condition group; explore paid search opportunities and alternative options for getting content out on the web through social media strategies. o The traditional concept of commercials is reinventing itself. Since less than half of consumers are watching all of their television programming live on TV sets, online video sponsorship or DVR-based advertising may be viable options for brands. Many consumers have indicated that they are receptive to this type of advertising since they are getting the content for free, and ads provide opportunities to lead targets to additional brand engagement, such as driving them to a website for more info or even having them play an interactive game within the ad Streaming video content offers a highly-engaged environment for reaching targeted consumers.
Trend In Pharmaceutical Market
Conclusion
Pharmaceuticals has emerged as one of the leading industries in the Indian Inc., with the domestic market showing an unprecedented growth of around 9% to generate revenue of about INR 554.5 Billion (US$ 11.1 Billion) in FY 2009. This dramatic growth in the Indian pharmaceutical industry can be attributed to several factors such as growing middle class population, rapid urbanization, increase in lifestyle-related diseases and acceptance of health insurance. Besides, the product patent regime has provided ample support to the industry to sustain its growth pace despite the global economic downturn. Generic is emerging as one of the leading segments to be benefited by many drugs going off-patent in due course of time. According to our new research report “Booming Pharma Sector in India”, the Indian pharmaceutical industry is projected to show double-digit growth in near future owing to rise in pharmaceutical outsourcing and consolidation of highly fragmented industry. As exports from major part of the pharmaceutical industry in India, leading players have started expanding their reach towards the West. Thanks to investments in R&D and thriving for more and more ANDA filings, the clinical trials market is expected to grow at blistering pace in coming years. To support this evidence, we have done an extensive research and analysis of various segments of the Indian pharmaceutical market. These segments include: Domestic & Export Market, Branded & Generics Drugs, Formulations & Bulk Drugs, etc. The baseline for optimistic future outlook of the pharmaceutical market is improvement in access to medicines of Indian population. Emerging sectors like biogenerics and pharma packaging will also pave the way for the pharmaceutical market to continue its upward trend over the forecast period (FY 2010- FY 2013). The report provides thorough statistical and analytical overview of the Indian pharmaceutical market. It contains information about past, present and future trends, with focus on entire structure, composition and working of the pharmaceutical market. The report extensively discusses opportunities and challenges expected to arise within and outside the pharmaceutical market. The report also analyzes emerging sectors, regulatory environment and distribution system to identify strength and weaknesses of the pharmaceutical market. It has thoroughly examined current market trends; industrial developments and competitive landscape to enable clients understand the market structure and its progress in coming years. It also gives a brief
Trend In Pharmaceutical Market
overview of demographics and healthcare profile to adjudge the pharmaceutical market in terms of demand, expenditure and possible future direction.
SAMIK GHOSH JSB BATCH (11-13) Sem 6th
Trend In Pharmaceutical Market
Introduction
Technology has prompted drastic changes in the marketing world over the past decade, and pharmaceutical marketing has not been excluded from this evolution. Faced with shifting consumer and physician media preferences and shrinking budgets - what is a smart pharmaceutical marketer to do? The task is best summed up by the words of English naturalist Charles Darwin, “It is not the strongest of the species that survives, nor the most intelligent that survives. It is the one that is the most adaptable to change.” So change you must. The following paper overviews the latest consumer and physician digital health trends, explores digital marketing examples, and shares helpful resources for staying up-to-date on the latest digital pharma news and information.
Digital Health Trends Physician Market Trends
The first and still the most prevalent, pharmaceutical drug promotions were aimed at the gatekeepers of the prescription pad - physicians. Traditionally, pharmaceutical companies have deployed sales reps armed with product information and freebies to promote products to doctors. But technology trends and changing media preferences are forcing pharmaceutical companies to reassess how they reach and build relationships with physicians. Internet-savvy In the past, doctors were limited to offline materials like physicians are no longer journals and references for accessing medical information and an emerging group – news. But those days are long gone, and with just a click of a nearly all physicians are mouse or touch of a screen, physicians have access to all of the resources they need to stay abreast of the latest online for professional knowledge in the field. Internet-savvy physicians are no longer purposes weekly or an emerging group – this market is at a saturation point, as more. nearly all physicians are online for professional purposes weekly or more. In fact, the average physician now spends a full work day (eight hours) per week using the Internet for professional reasons, a substantial jump from only 2.5 hours in 2002. The trend of shifting to digital channels is expected to continue, with physicians reporting that they expect to increase their use of online resources in the near future. Professional content that have been feeling “the shift” the most are clinical textbooks/references, journals, conferences, news, and continuing medical education (CME).
Trend In Pharmaceutical Market
Mobile technology has played a significant role in increasing physicians’ dependency on online resources – 64% of doctors own smartphones and are using them to supplement their desk or laptop computer usage to be “always on.” Also, mobile devices help physicians to access clinical resources at multiple points throughout their day, even to at the point of care. Currently, physicians prefer to conduct easy tasks such as information-checking on mobile devices, while leaving more complex activities like CME for completion on their PCs. But as mobile browsing capabilities improve, physicians will start to use smartphones for more advanced activities than just reference purposes.
Physician engagement in Web 2.0 has been one of the hottest topics over the past few years. As a group, physicians have acclimated themselves to advanced online activities, such as watching streaming video and listening to podcasts, at a much faster rate than consumers. Doctors are also catching the social media fever. Many are collaborating in online communities designed specifically for healthcare professionals; participation in these networks doubled between 2008 and 2009. Just as the professional channel mix is evolving, so is the traditional physician-sales rep relationship. Physicians are no longer limited to in-person details for information and updates on pharmaceutical products, but can easily seek out this type of information at any time via the Internet. In light of this, pharmaceutical companies are offering physician online customer services such as customer service portals, live video reps, interactive detailing, and e-sampling. Sales reps are also “digitalizing” their in-person visits with tools such as tablet PCs.
Trend In Pharmaceutical Market
Consumer Market Trends
Unlike physician marketing, DTC advertising in the U.S. is a fairly recent development, only just about to reach the quarter-century club. And the DTC advertisements that we know today have only cropped up in just over the past decade, after the FDA amended its legislation on the amount of risk information required for drug companies to append to promotional material. Similar to the physician market, an emerging breed of eHealth consumers – those using digital sources for health – is transforming direct-to-consumer (DTC) marketing. Like in the case of the physician market, the consumer channels mix has been shifting significantly towards digital over the past decade. An ever-increasing plenitude of media sources has ultimately given individuals the upper hand in controlling their information consumption, lessening advertisers’ ability to reach a concentrated consumer mass through an y one channel. Television, magazines, and newspapers no longer dominate the news and entertainment world as they once did. In fact, less than half of U.S. adults report to watch all of their Less than half of U.S. adults television programs lives on their TV set, indicating report to watch all of their the growing popularity of DVR, online video, and television programs lives on other alternative viewing channels. Following suit their TV set. with the overall consumer channel shift, individuals of all ages are turning to the Internet as tool to empower healthcare decisions. This eHealth consumer market is not yet at the point of saturation, but still is a substantial 60% of the U.S. adult population. Health 2.0 is one of the hottest areas of online health. Over 60 million U.S. adults consume or contribute health-related social media content, such as blogs, message boards, chat rooms, online patient support groups and other networks. Patient online rating and reviewing of doctors, health insurance plans, hospitals, and prescription drugs is one of the fasting growing Health 2.0 activities - and is helping consumers to compare experiences and become more empowered in their personal healthcare decisions. Consumers have not reached the same adoption levels as physicians when it comes to smartphones and advanced mobile technologies beyond just the cell phone. But an early adopter group of mHealth (mobile health) consumers is emerging, as already over 10 million consumers use mobile devices for health and medical purposes. The mHealth trend has been largely driven by a plethora of new healthrelated iPhone applications, ranging from weight loss trackers to diabetes management tools to medication dosage references.
Trend In Pharmaceutical Market
Major Industry Trends
Healthcare and pharmaceuticals are two distinct industries, but they are interdependent and are subject to similar trends, which is why they are covered together in this profile. Both are benefiting from ageing populations in many advanced economies, and various developing countries, such as China. In addition, important medical discoveries, including the decoding of the human genome, are fueling scientific advances, and facilitating the release of new drugs and treatments.
The Impact of the 2008 Recession and Growth through 2011
The investment community generally regards healthcare and pharmaceutical companies as “defensive” stocks, because they tend to be relatively immune to the vagaries of the economic cycle. While consumers may cut back on purchases of many discretionary items during a recession, most people regard their health as a priority. In addition, while individuals may cut back on private healthcare in times of economic hardship, this simply increases demand for healthcare services provided by the public sector. Most healthcare spending in the Western world is funded by governments, and such spending is highly sensitive in political terms. Most democratically elected governments prefer to find savings in areas other than healthcare for fear of losing votes. Clearly, however, even healthcare spending comes under pressure during a severe economic recession. In both Europe and the United States, spending on health and government support for healthcare for the vulnerable and the elderly is cited, along with state pension commitments, as one of the more intractable drivers behind growing and unsustainable public sector deficits. Beyond just looking up general health resources, 100 million consumers are online specifically for pharmaceutical or prescription drug information. Individuals obtain this information from a variety of sources, including blogs, insurance sites, general health portals, government sites, Wikipedia, online communities, and of course the corporate and brand sites of the product makers themselves.
Trend In Pharmaceutical Market
Online health and pharma digital trends are leading to better informed, more empowered patients, and are impacting physician-patient interactions. Virtually all U.S. physicians report that at least some of their patients bring health information they found online to an appointment, and more than two-thirds of physicians believe that this trend is a good thing. Additionally, the majority of physicians report they spend more time with a patient as a result of the information they brought in to discuss. Traditional doctor-to-patient lectures are giving way to two-way conversations between physicians and informed eHealth Consumers.
Rx Connect™ delivers comprehensive brand information with digital media---at the pharmacy shelf next to targeted OTC products. Consumers get the information they need about the prescription product as well as the condition it treats---facilitating a more informed patientphysician dialogue.
Trend In Pharmaceutical Market
Market Analysis
Healthcare Spending
The total global expenditure for health is now more than US$4.7 trillion a year, according to the World Health Organization, and health expenditure as a percentage of GDP has been increasing among all major economies. Spending on healthcare varies widely from country to country, as do outcomes. Nor is there necessarily a correlation between the amount of money spent and the effectiveness of the healthcare system. The United States spends more on healthcare than any other country, in both relative and absolute terms, yet its healthcare system scores poorly in terms of its overall performance, according to the Commonwealth Fund Commission, a US private foundation that supports independent research on healthcare issues. The Fund produced a report on the performance of the US health system in 2008 (“National scorecard on US health system performance”). The scorecard aimed to measure and monitor healthcare outcomes, quality, access, efficiency, and equity in the United States. It ranked the United States last out of 19 countries on a measure of mortality amenable to medical care.This poor performance may reflect the nature of healthcare provision in the United States. The country has several types of privately and publicly funded insurance plans that provide healthcare services. However, the private sector dominates healthcare and the United States is the “only wealthy, industrialized nation that does not ensure that all citizens have coverage” (that is, some kind of insurance), according to the Institute of Medicine, a nonprofit organization for science-based advice on matters of biomedical science, medicine, and health. By contrast, a publicly funded healthcare system, the NHS, dominates healthcare in the United Kingdom, accounting for more than 80% of healthcare spending in the country. Founded in 1948, it aims to provide a free, comprehensive healthcare service, with delivery at the point of need, regardless of the ability to pay. It is the world’s largest publicly funded health service, and claims it is also “one of the most efficient, most egalitarian, and most comprehensive.” Yet it has many critics, who argue that it is inefficient and overly bureaucratic. Other countries fund their health services in a variety of ways. According to Key Note Ltd, a UKbased market-research company, the Netherlands operates a national insurance market for its 16 million residents. Plans may operate on a for-profit or nonprofit basis. The insurance market is highly concentrated, with the top five plans accounting for 82% of enrolment. Plans typically offer coverage in all areas of the country and include all providers, although selective contracting is allowed. Children are covered in full through public funds. Premiums charged for adults represent 50% of the expected annual costs. By contrast, according to Key Note, the Swiss insurance system, which covers 7.5 million people, is highly decentralized. Only nonprofit
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insurers may participate in the scheme, and Swiss premiums vary widely according to the health risks of insured pools across the country, and within regions.
Country Australia Canada France Germany Italy Ireland Japan Portugal Spain Sweden Switzerland United Kingdom United States
Healthcare spending, % of GDP 8.9 10.1 11.0 10.4 8.7 7.6 8.1* 10.2* 8.5 9.1 10.8 (est.) 8.4 16.0
Table 1. Total healthcare spending as a percentage of GDP, 2012. (Source: OECD,www.irdes.fr/EcoSante/DownLoad/OECDHealthData_FrequentlyRequestedData.xls)
Japan spends around 8.1% of its GDP on healthcare, almost half the amount of the United States. Yet the Japanese have the longest healthy life expectancy on the planet. Diet and lifestyle clearly play a key role, but the country’s universal healthcare system may also be an important factor. Everyone in Japan is required to take out a health-insurance policy, either at work or through a community-based insurer, according to Key Note. The firm adds: “The government pays for those who are too poor. However, 80% of Japan’s hospitals are privately owned—more than in the US—and almost every doctor’s office is a private business. The Japanese Health Ministry tightly controls the price of healthcare, down to the smallest detail. Every two years, the healthcare industry and the health ministry negotiate a fixed price for every procedure and every drug.” The US-based National Bureau of Economic Research conducted a study of ten OECD countries and it points out that healthcare expenditure has been growing at a faster rate, often considerably faster, than per-capita income. In the United States, healthcare expenditure has tripled as a share of GDP since 1950, from 5% to 15% of GDP. The NBER’s study found that the primary cause of the continued ramping up of healthcare costs was the provision of increased healthcare benefits. It points out that pushing up health benefits faster than per capita tax and income growth is clearly unsustainable, but that major economies, the United States in particular, currently show little sign of reining in the upward march of benefits, despite huge cost increases. If this keeps up the United States will see a doubling in healthcare costs as a
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percentage of GDP within the next 20 years, and a tripling in the next 40 years. No country could afford that, it points out, so the dilemma of what level of healthcare is appropriate remains to be resolved.
Global R&D Spending ($ Billions) 1996-2009
Top 15 R&D Expenditure ($ Billion) 2011
COMPANY Novartis Pfizer Roche Merck Johnson & Johnson GlaxoSmithKline Sanofi-aventis AstraZeneca Eli Lilly Bristol-Myers Squibb Abbott lab. Takeda pharma Boehringer ingelheim Daiichi sankyo Money(Billion) $9.58 $9.1 $8.8 $8.4 $7.5 $6.29 $6.24 $5.5 $5.00 $3.8 $3.7 $3.48 $3.2 $2.2
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Astellas pharma $2.5
Total: Over $85 Billion
Overview of Pharmaceutical Industry The Indian Pharmaceutical Industry currently tops the chart amongst India’s science -based industries with wide ranging capabilities in the complex field of drug manufacture and technology. The Indian Pharmaceutical Industry ranks very high amongst all third world countries, in terms of technology, quality and the vast range of medicines that are manufactured. The Pharmaceutical industry has grown from mere US$ 0.3 billion turnover in 1980 to about US$ 21.73 billion in 2009-10. The country now ranks 3 rd in terms of volume of production (10 per cent of global share) a 14th largest by value (1.5 per cent of global share). One reason for lower value share is the lowest cost of drugs in India ranging from 5 per cent to 50 per cent less as compared to developed countries. Indian pharmaceutical industry growth has been fuelled by exports and its products are exported to a large number of countries with a sizeable share in the advanced regulated markets of the US and Western Europe. Many Indian companies maintain highest standards in Purity, Stability and International Safety, Health and Environmental (SHE) protection in production and supply of bulk drugs even to some innovator companies. This speaks of the high quality standards maintained by a large number of Indian Pharma companies as these bulk actives are used by the buyer companies in manufacture of dosage forms which are again subjected to stringent assessment by various regulatory authorities in the importing countries. More of Indian companies are now seeking regulatory approvals in USA in specialized segments like Anti-infective, Cardiovascular, CNS group. Along with Brazil & PR China, India has carved a niche for itself by being a top generic Pharma player. Increasing number of Indian pharmaceutical companies have been getting international regulatory approvals for their plants from agencies like USFDA (USA), MHRA (UK), TGA (Australia), MCC (South Africa), Health Canada etc. India has the largest number of USFDAapproved plants for generic manufacture. Considering that the pharmaceutical industry involves sophisticated technology and stringent "Good Manufacturing Practice (GMP) requirements, major share of Indian Pharma exports going to highly developed western countries bears testimony to not only the excellent quality of Indian pharmaceuticals but also its price competitiveness. More than 50 per cent share of exports is by way of dosage forms. Indian companies are now seeking more Abbreviated New Drug Approvals (ANDAs) in USA in specialized segments like anti-infective, cardio vascular and central nervous system groups.
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Exports India currently exports drug intermediates, Active Pharmaceutical Ingredients (APIs), Finished Dosage Formulations (FDFs), Bio-Pharmaceuticals, Clinical Services to various parts of the world. Export of Drugs and pharmaceuticals from 2007-08 to 2009-10 are given below:
Year 2007-08 2008-09 2009-10 Exports (US$ billions) 6.3 8.6 9.1 Growth (in percent) 14.4 35.7 5.9
Source: Directorate General of Commercial Intelligence and Statistics (DGCIS) Kolkata
The domestic Pharma Industry
The domestic Pharma Industry has recently achieved some historic milestones through a leadership position and global presence as a world class cost effective generic drugs' manufacturer of AIDS medicines. Many Indian companies are part of an agreement where major AIDS drugs based on Lamivudine, Stavudine, Zidovudine, Nevirapine will be supplied to Mozambique, Rwanda, South Africa and Tanzania which have about 33 per cent of all people living with AIDS in Africa. Yet another US Scheme envisages sourcing Anti Retrovirals from some Indian companies whose products are already US FDA approved. Many Indian companies maintain highest standards in Purity, Stability and International Safety, Health and Environmental (SHE) protection in production and supply of bulk drugs even to some innovator companies. This speaks of the high quality standards maintained by a large number of Indian Pharma companies as these bulk actives are used by the buyer companies in manufacture of dosage forms which are again subjected to stringent assessment by various regulatory authorities in the importing countries. More of Indian companies are now seeking regulatory approvals in USA in specialized segments like Anti-infectives, Cardiovasculars, and CNS group. Along with Brazil & PR China, India has carved a niche for itself by being a top generic Pharma player. Increasing number of Indian pharmaceutical companies have been getting international regulatory approvals for their plants from agencies like USFDA (USA), MHRA (UK), TGA (Australia), MCC (South Africa), Health Canada etc. India has the largest number of USFDA -
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approved plants for generic manufacture. Considering that the pharmaceutical industry involves sophisticated technology and stringent "Good Manufacturing Practice (GMP) requirements, major share of Indian Pharma exports going to highly developed western countries bears testimony to not only the excellent quality of Indian pharmaceuticals but also its price competitiveness. More than 50 per cent share of exports is by way of dosage forms.
Indian companies are now seeking more Abbreviated New Drug Approvals (ANDAs) in USA in specialized segments like anti-infective, cardio vascular and central nervous system groups. Trends Since the mid-90 the industry has been undergoing a consolidation period. Mergers involving many large and medium size companies have been common in this period. The success of the stock market has made large amounts of capital available at reasonable rates for borrowing or for raising equity. The companies involved in the mergers are biotech companies, who develop products based on living cells. Also involved are companies who have developed new technology in unlocking the genetic makeup of human. Many foreign companies have been entering the United States market because of its uncontrolled pricing structure, rapid approval processes, private and public insurance reimbursement policies and government support for basic research. Additionally, the industry enjoys many tax benefits not available in other countries, although the benefits are narrowing. The tax benefits include Research & Experiment Credit for research conducted in the United States, the IRC 936 Puerto Rican Tax Credit for possession companies, and Orphan Drug Credit for illnesses afflicting two hundred thousand or less patients. Benefits of relocation to the United States include the ability to advertise to both the medical community and direct to consumers in an effort to increase awareness and consumption. The restructuring of the United States’ Food and Drug Administration has had a tremendous impact in the ability of companies to bring drugs to market quickly. A tremendous lobbying effort on the part of the drug industry has resulted in the reduction of the average approval time for new drugs from two or three years to one year or less. A prime example of the quick approval process was the 42-day approval of reverse transcription drugs for HIV that stems the progression of the virus. More than half of the new drugs approved in the United States in 1998 were the first approval anywhere. Another segment of the industry that has enjoyed the changes has been the generic pharmaceutical industry. This segment may manufacture drugs based on the original product once the patent on the original chemical entity expires. The generic industry does not have to conduct the expensive clinical trials performed by innovator companies. Clinical trials are performed in order to prove a drug is safe and effective for the illness they wish to treat. Not
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having to conduct clinical trials has substantially reduced the cost of bringing a product to market. The last segment of the pharmaceutical industry, which resulted from the early 90’s downsizing, is the Clinical Research Organization (CRO’s) segment. These companies are primarily involved in the clinical trial, which shows the effectiveness of the drug. Clinical trials are quite large, often involving 3,000 or more patients who volunteer to test the product. These companies are contracted by innovator companies who pay them on a per patient basis to conduct the trials. All the data belongs to the drug company that pays for the trial. The trial results must be statistically valid.
Consumer eMarketing Life Cycle
Reach DTC advertising was still in its adolescence when the usual way of doing things began to change due to emerging technologies and new media. Television, print and radio ads become less effective as the consumer media mix continues to fragment. Additionally, the mass media tactics that were once successful in raising awareness of blockbuster drugs aren’t as efficient as the industry shifts focus to niche therapies. So while offline DTC advertising still dominates, it’s important for pharmaceutical marketers to keep up with consumers’ evolving media preferences. Action Items o Search is still a major consumer driver to online health and pharmaceutical content – consumers start with search engines two-thirds of the time when looking for health information online. Look into expanding brand sites with keyword-rich content on topics relevant to target condition group; explore paid search opportunities and alternative options for getting content out on the web through social media strategies. o The traditional concept of commercials is reinventing itself. Since less than half of consumers are watching all of their television programming live on TV sets, online video sponsorship or DVR-based advertising may be viable options for brands. Many consumers have indicated that they are receptive to this type of advertising since they are getting the content for free, and ads provide opportunities to lead targets to additional brand engagement, such as driving them to a website for more info or even having them play an interactive game within the ad Streaming video content offers a highly-engaged environment for reaching targeted consumers.
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Conclusion
Pharmaceuticals has emerged as one of the leading industries in the Indian Inc., with the domestic market showing an unprecedented growth of around 9% to generate revenue of about INR 554.5 Billion (US$ 11.1 Billion) in FY 2009. This dramatic growth in the Indian pharmaceutical industry can be attributed to several factors such as growing middle class population, rapid urbanization, increase in lifestyle-related diseases and acceptance of health insurance. Besides, the product patent regime has provided ample support to the industry to sustain its growth pace despite the global economic downturn. Generic is emerging as one of the leading segments to be benefited by many drugs going off-patent in due course of time. According to our new research report “Booming Pharma Sector in India”, the Indian pharmaceutical industry is projected to show double-digit growth in near future owing to rise in pharmaceutical outsourcing and consolidation of highly fragmented industry. As exports from major part of the pharmaceutical industry in India, leading players have started expanding their reach towards the West. Thanks to investments in R&D and thriving for more and more ANDA filings, the clinical trials market is expected to grow at blistering pace in coming years. To support this evidence, we have done an extensive research and analysis of various segments of the Indian pharmaceutical market. These segments include: Domestic & Export Market, Branded & Generics Drugs, Formulations & Bulk Drugs, etc. The baseline for optimistic future outlook of the pharmaceutical market is improvement in access to medicines of Indian population. Emerging sectors like biogenerics and pharma packaging will also pave the way for the pharmaceutical market to continue its upward trend over the forecast period (FY 2010- FY 2013). The report provides thorough statistical and analytical overview of the Indian pharmaceutical market. It contains information about past, present and future trends, with focus on entire structure, composition and working of the pharmaceutical market. The report extensively discusses opportunities and challenges expected to arise within and outside the pharmaceutical market. The report also analyzes emerging sectors, regulatory environment and distribution system to identify strength and weaknesses of the pharmaceutical market. It has thoroughly examined current market trends; industrial developments and competitive landscape to enable clients understand the market structure and its progress in coming years. It also gives a brief
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overview of demographics and healthcare profile to adjudge the pharmaceutical market in terms of demand, expenditure and possible future direction.
